[EXHIBIT 99.3]
TROOP MEISINGER STEUBER & PASICH, LLP
LOUIS M. MEISINGER, State Bar No. 41481
KIRK A. PASICH, State Bar No. 94242
LINDA D. KORNFELD, State Bar No. 155765
10940 Wilshire Boulevard, Eighth Floor
Los Angeles, California 90024-3902
Telephone: (310) 824-7000
Attorneys for Defendants and Cross-complainants
CALIFON PRODUCTIONS, INC. and
JEOPARDY PRODUCTIONS, INC.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
KING WORLD PRODUCTIONS, INC.,
CASE NO.: BC 168 059
Plaintiff,
CROSS-COMPLAINT FOR
vs. BREACH OF CONTRACT,
TERMINATION OF
CALIFON PRODUCTIONS, INC., JEOPARDY CONTRACT, AND
PRODUCTIONS, INC., and DOES 1 REFORMATION
through 10, INCLUSIVE,
Defendants.
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CALIFON PRODUCTIONS, INC., JEOPARDY
PRODUCTIONS, INC.,
Cross-Complainants,
vs.
KING WORLD PRODUCTIONS, INC., and
ROES 1 through 10,
Cross-Defendants.
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Defendants and cross-complainants Califon Productions, Inc.
("Califon") and Jeopardy Productions, Inc. ("Jeopardy") (collectively
"cross-complainants") complain of cross-defendants and allege as
follows:
THE PARTIES
1. Califon is a New York corporation with its principal place
of business in Los Angeles, California. Califon is authorized to
transact and is transacting business in Los Angeles County.
2. Jeopardy is a Delaware corporation with its principal place
of business in Los Angeles, California. Jeopardy is authorized to
transact and is transacting business in Los Angeles County.
3. Cross-Complainants are informed and believe, and on that
basis allege, that King World Productions, Inc. ("King World") is a
Delaware corporation with its principal place of business in New Jersey.
King World is authorized to transact and is transacting business in Los
Angeles County.
4. Cross-complainants are ignorant of the true names and
capacities, whether individual, associate, partnership, corporate, or
otherwise, of the cross-defendants fictitiously designated herein as
Roes 1 through 10, and therefore sue those cross-defendants by these
fictitious names. Cross- complainants will seek leave of court to amend
this cross- complaint when the true names and capacities of these
fictitously designated cross-defendants have been ascertained.
Cross-complainants are informed and believe, and on that basis allege
that cross-defendants Roes 1 through 10 are, and at all times relevant
hereto, have been the principals, agents, employees, partners,
co-venturers, alter egos or conspirators of King World, and of each
other, and as a result thereof have an interest in the matters that are
the subject matter of this Cross-Complaint.
FACTUAL BACKGROUND
5. Cross-complainants have produced, or have had produced on
their behalf, Jeopardy! and Wheel of Fortune, two television game shows,
since the early 1980's. Jeopardy! is a game show hosted by Alex Trebek,
in which three contestants in each episode vie to pose "questions" in
response to "answers" displayed on a screen in certain categories. Wheel
of Fortune is a game show hosted by Pat Sajak, with co-host Vanna White,
in which contestants spin a wheel and attempt to guess words or phrases
by filling in the blanks on the puzzle board. Both shows are among the
most profitable and long-running shows on television. Both shows have
been distributed by cross- defendant King World in first-run
syndication--that is, for broadcast of original episodes by individual
television stations or groups of television stations nationwide, rather
than only on a particular network. Both shows are also "strip" shows,
meaning that they are broadcast on at least five days per week. King
World became the "exclusive" syndicator of both shows pursuant to
agreements entered into with Califon in the early 1980's.
6. In or about late November or early December 1982,
representatives of King World and Califon began discussions about a
possible agreement whereby King World would obtain the exclusive right
to syndicate certain episodes of Wheel of Fortune. Califon and King
World ultimately entered into an agreement as of December 15, 1982 (the
"Wheel of Fortune Agreement"). A true and correct copy of the Wheel of
Fortune Agreement and amendments thereto is attached hereto as Exhibit
A.
7. In or about November 1, 1983, King World and Califon
entered into an agreement regarding syndication of certain episodes of
the television game show Jeopardy! (the "Jeopardy Agreement"). A true
and correct copy of the Jeopardy Agreement and amendments thereto is
attached hereto as Exhibit B. Califon ultimately assigned its rights in
and to this Agreement to Jeopardy. The Jeopardy Agreement contains
substantially the same terms and provisions as those in the Wheel of
Fortune Agreement.
8. During the course of the negotiations for both the Wheel of
Fortune Agreement, and the Jeopardy Agreement, and at the time that both
agreements ultimately were entered, Califon understood and expected that
while either of the agreements were in effect, King World would not
compete with Califon with any other strip game show in first-run
syndication, and specifically, would not place or maintain any other
strip game show in the first-run syndication marketplace by, among other
things, marketing, testing, promoting, licensing for distribution, or
seeking others to license for distribution, or otherwise using its
distribution experience, expertise, leverage, "know how," or contacts in
placing or maintaining any other strip game show in the first-run
syndication marketplace (these activities hereinafter are referred to as
"Distribution Activities"). King World knew, or should have known, that
Califon held this understanding and expectation. King World's agreement
not to compete with Califon in these manners was a material deal point
for Califon in entering into both the Wheel of Fortune Agreement and the
Jeopardy Agreement. Without the parties' mutual understanding and
agreement on this point, or at least Califon's reasonable belief that
the parties mutually understood and agreed on this point, Califon never
would have entered into either the Wheel of Fortune Agreement or the
Jeopardy Agreement.
9. Califon understood that King World's agreement not to
compete with Califon with any other strip game show in first-run
syndication ultimately was memorialized in paragraph 21 of both the
Wheel of Fortune Agreement and the Jeopardy Agreement. Paragraph 21
reads, in relevant part, as follows:
Owner [Califon] acknowledges that Distributor [King
World] is engaged in the business of distributing
television programs and that nothing herein
contained shall be deemed to restrict or limit in
any way Distributor's right to produce or distribute
other television programs except that during the
term Distributor shall not distribute any other
strip game show for first fun syndication.
10. The Wheel of Fortune Agreement and the Jeopardy Agreement
also contain, in paragraph 8(a), an obligation by King World to "use its
best efforts to distribute [Wheel of Fortune and Jeopardy!] so as to
secure the maximum receipts therefrom." A covenant of good faith and
fair dealing also is implied in the Wheel of Fortune Agreement and the
Jeopardy Agreement. Pursuant to this covenant, King World is obligated,
among other things, to act in good faith towards cross-complainants.
11. At the time that Califon and King World entered into the
Wheel of Fortune Agreement and the Jeopardy Agreement, King world was
(and continues to be) in the business of distributing, among other
things, television programs, including certain game shows. King World
was not, at the time it entered into the Wheel of Fortune Agreement and
the Jeopardy Agreement, engaged in any way in the business of producing
or licensing others to produce any original television programming, and
the parties to the agreements did not reasonably contemplate that King
World ever would become involved in any such production activities, at
least with respect to game shows. In fact, because of the broad nature
and demands of its distribution obligations regarding Wheel of Fortune
and Jeopardy!, King World could not have any involvement with
production-related activities in connection with game shows for
first-run syndication, without, performing at least some Distribution
Activities. Indeed, under industry custom and practice, there is an
inevitable connection between the Distribution Activities and ownership
of the property together with production activities, such that as a
"producer" and "owner" of games shows for first-run syndication, King
World inevitably would be involved in distribution decisions regarding
any such shows.
12. King World has made hundreds of millions of dollars in
profits, and essentially has built its entire business based upon its
approximately 15-year relationship with cross- complainants and its
right exclusively to syndicate Wheel of Fortune and Jeopardy!. In
return, Califon has sought from the outset King World's continued
adherence to certain limited conditions, one of which is King World's
agreement not to engage in any sort of Distribution Activities in
connection with any strip game show in first-run syndication. This
adherence necessarily would include a prohibition against production and
ownership activities, which by their nature would force King World also
to engage, to some degree, in Distribution Activities, and thus,
inevitably create an unresolvable conflict of interest for King World.
13. King World recently has informed cross-complainants that
it intends to produce or license others to produce "Hollywood Squares"
and/or other shows, each of which is a strip game show owned by King
World intended for first-run syndication, and also that it intends to
license each show for first-run syndication. This would be in direct
violation of material express and implied covenants in the Wheel of
Fortune Agreement and the Jeopardy Agreement and of King World's
agreement not to compete with cross-complainants. Notwithstanding these
facts, cross-complainants are informed and believe, and on that basis
allege, that even though cross- complainants told King World that its
activities would be a material breach of the Wheel of Fortune Agreement
and the Jeopardy Agreement, King World already has begun such
activities.
14. Cross-complainants are informed and believe, and on that
basis allege that in further material violation of the Wheel of Fortune
Agreement and the Jeopardy Agreement, King World has engaged, and
continues to engage in Distribution Activities with regard to "Hollywood
Squares" and/or other shows, each of which is a strip game show intended
for first- run syndication.
FIRST CAUSE OF ACTION
(Breach of Contract as to the Wheel of Fortune Agreement)
15. Cross-complainants reallege and incorporate by this
reference the allegations of paragraphs 1-14 hereof.
16. King World is prohibited by paragraphs 8(a) and 21 of the
Wheel of Fortune Agreement, and the implied covenant of good faith and
fair dealing, from competing with cross- complainants with regard to
strip game shows for first-run syndication, including by (1) producing
or licensing others to produce any strip game show for first-run
syndication, (2) distributing in first-run syndication, or granting any
license of any other entity for the first-run syndication of, any strip
game show, other than Wheel of Fortune and Jeopardy!, and (3) in any
other manner engaging in any activities in placing or maintaining any
strip game show, other than Wheel of Fortune and Jeopardy!, in first-run
syndication.
17. Cross-complainants are informed and believe, and on that
basis allege, that King World, in material breach of its duties, has,
among other things, engaged in the following wrongful conduct:
a. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune or
Jeopardy!, by engaging in licensing and pre-
licensing activities regarding that game show with
third parties;
b. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune or
Jeopardy!, by contacting other syndicators who
themselves own, are part of, or have access to large
television station groups, and offering to make the
game show available to those syndicators, along with
exhibition rights to Wheel of Fortune and Jeopardy!;
and
c. Violating its obligation to use its best
efforts to distribute Wheel of Fortune and Jeopardy!
so as to secure the maximum receipts therefrom, by
producing or licensing others to produce and/or
distributing or licensing others to distribute a
competing strip game show for first-run syndication.
18. As a direct and proximate result of King World's breaches
as alleged above, cross-complainants have suffered, and will continue to
suffer, damages in an amount according to proof, which
cross-complainants are informed and believe, and on that basis allege,
exceeds the minimum jurisdictional limit of this Court.
SECOND CAUSE OF ACTION
(Breach of Contract as to the Jeopardy Agreement)
19. Cross-complainants reallege and incorporate by this
reference the allegations of paragraphs 1-14 and 16-18 hereof.
20. King World is prohibited by paragraphs 8(a) and 21 of the
Jeopardy Agreement, and the implied covenant of good faith and fair
dealing, from competing with cross-complainants with regard to strip
game shows for first-run syndication, including by (1) producing or
licensing others to produce any strip game show for first run
syndication, (2) distributing in first-run syndication, or granting any
license to any other entity for the first-run syndication of, any strip
game show, other than Wheel of Fortune and Jeopardy!, and (3) in any
other manner engaging in any activities in placing or maintaining any
strip game show, other than Wheel of Fortune and Jeopardy!, in first-run
syndication.
21. Cross-complainants are informed and believe, and on the
basis allege, that King World, in material breach of its duties, has
among, other things, engaged in the following wrongful conduct:
a. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune or
Jeopardy!, by engaging in licensing and pre-
licensing activities regarding that game show with
third parties;
b. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune or
Jeopardy!, by contacting other syndicators who
themselves own, are part of, or have access to large
television station groups, and offering to make the
game show available to those syndicators, along with
exhibition rights to Wheel of Fortune and Jeopardy!;
and
c. Violating its obligation to use its best
efforts to distribute Wheel of Fortune and Jeopardy!
so as to secure the maximum receipts therefrom, by
producing or licensing others to produce and/or
distributing or licensing others to distribute a
competing strip game show for first-run syndication.
22. As a direct and proximate result of King World's breaches
as alleged above, cross-complainants have suffered, and will continue to
suffer, damages in an amount according to proof, which
cross-complainants are informed and believe, and on that basis allege,
exceeds the minimum jurisdictional limit of this Court.
THIRD CAUSE OF ACTION
(Termination of the Wheel of Fortune Agreement)
23. Cross-complainants reallege and incorporate by this
reference the allegations of paragraphs 1-14, 16-18, and 20-22 hereof.
24. King World materially has breached its obligations under
the Wheel of Fortune Agreement, by engaging in the following wrongful
conduct:
a. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune or Jeopardy!,
by engaging in licensing and pre-licensing activities
regarding that game show with third parties;
b. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune or
Jeopardy!, by contacting other syndicators who
themselves own, are part of, or have access to large
television station groups, and offering to make the
game show available to those syndicators along with
exhibition rights to Wheel of Fortune and Jeopardy!;
and
c. Violating its obligation to use its best
efforts to distribute Wheel of Fortune and Jeopardy!
so as to secure the maximum receipts therefrom, by
producing or licensing others to produce and/or
distributing or licensing others to distribute a
competing strip game show for first-run syndication.
By operation of law, Califon thus is entitled to, and hereby
does, elect to cancel and terminate the Wheel of Fortune
Agreement. Therefore, cross-complainants are excused from any
future performance thereunder.
FOURTH CAUSE OF ACTION
(Termination of the Jeopardy Agreement)
25. Cross-complainants reallege and incorporate by this
reference the allegations of paragraphs 1-14, 16-18, 20-22, and 24
hereof.
26. King World materially has breached its obligations under
the Jeopardy Agreement, by engaging in the following wrongful conduct:
a. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune and
Jeopardy!, by engaging in licensing and pre-
licensing activities regarding that game show with
third parties;
b. Distributing a strip game show for first-run
syndication, other than Wheel of Fortune or
Jeopardy!, by contacting other syndicators who
themselves own, are part of, or have access to large
television station groups, and offering to make the
game show available to those syndicators, along with
exhibition rights to Wheel of Fortune and Jeopardy!;
and
c. Violating its obligation to use its best
efforts to distribute Wheel of Fortune and
Jeopardy!, so as to secure the maximum receipts
therefrom, by producing or licensing others to
produce and/or distributing or licensing others to
distribute a competing strip game show for first-run
syndication. By operation of law, Califon thus is
entitled to, and hereby does, elect to cancel and
terminate the Jeopardy Agreement. Therefore, cross-
complainants are excused from any future performance
thereunder.
FIFTH CAUSE OF ACTION
(Reformation as to the Wheel of Fortune Agreement)
27. Cross-complainants reallege and incorporate by reference
herein each allegation contained in paragraphs 1-14, 16-18, 20-22, 24,
and 26 hereof.
28. When entering into the Wheel of Fortune Agreement, the
parties mutually understood and agreed, or Califon reasonably believed
that the parties mutually understood and agreed, and King World knew
that Califon held such a reasonable belief, that pursuant to the Wheel
of Fortune Agreement, King World would be prohibited from competing with
cross-complainants with regard to strip game shows for first- run
syndication, including by (1) producing or licensing others to produce
any strip game show for first run syndication, (2) distributing in
first-run syndication, or granting any license to any other entity for
the first-run syndication of, any strip game show, other than Wheel of
Fortune and Jeopardy!, and (3) in any other manner engaging in any
activities in placing or maintaining any strip game show, other than
Wheel of Fortune and Jeopardy!, in first syndication. If the Wheel of
Fortune Agreement does not, in fact, prohibit King World from engaging
in any such competitive activities, then cross-complainants are entitled
to, and seek, reformation of the Wheel of Fortune Agreement to provide
that King World may not engage in any of these activities with regard to
strip game shows for first-run syndication. To the extent that
reformation may be necessary, cross-complainants request reformation on
the grounds of mutual mistake and/or unilateral mistake.
29. Cross-complainants are informed and believe, and on that
basis allege, that to the extent the Wheel of Fortune Agreement grants
King World the right to compete with cross- compalinants with regard to
strip game shows for first-run syndication, including by (1) producing
or licensing others to produce any strip game show for first-run
syndication, (2) distributing in first-run syndication or granting any
license to any other entity for the first-run syndication of any strip
game show, other than Wheel of Fortune and Jeopardy!, and (3) in any
other manner engaging in any activities in placing or maintaining any
strip game show in first-run syndication other than Wheel of Fortune and
Jeopardy!, then any such right to compete resulted from a mutual mistake
of the parties, or from a unilateral mistake by cross-complainants.
30. Cross-complainants have no plain, speedy or adequate
remedy at law.
31. Cross-complainants and King World are presumed to have
intended to make an equitable agreement. If the Wheel of Fortune
Agreement does not prohibit King World from competing with
cross-complainants with regard to strip game shows for first-run
syndication, then the Wheel of Fortune Agreement is inequitable,
entitling cross-complainants to reformation as alleged herein.
SIXTH CAUSE OF ACTION
(Reformation as to the Jeopardy Agreement)
32. Cross-complainants reallege and incorporate by reference
herein each allegation contained in paragraphs 1-14, 16-18, 20-22, 24,
26, and 28-31 hereof.
33. When entering into the Jeopardy Agreement, the parties
mutually understood and agreed, or Califon reasonably believed that the
parties mutually understood and agreed, and King World knew that Califon
held such a reasonable belief, that pursuant to the Jeopardy Agreement,
King World would be prohibited from competing with cross-complainants
with regard to strip game shows for first-run syndication, including by
(1) producing or licensing others to produce any strip game show for
first run syndication, (2) distributing in first-run syndication, or
granting any license to any other entity for the first-run syndication
of, any strip game show, other than Wheel of Fortune and Jeopardy!, and
(3) in any other manner engaging in any activities in placing or
maintaining any strip game show, other than Wheel of Fortune and
Jeopardy!, in first-run syndication. If the Jeopardy Agreement does not,
in fact, prohibit King World from engaging in any such competitive
activities, then cross-complainants are entitled to, and seek,
reformation of the Jeopardy Agreement to provide that King World may not
engage in any of these activities with regard to strip game shows for
first-run syndication. To the extent that reformation may be necessary,
cross-complainants request reformation on the grounds of mutual mistake
and/or unilateral mistake.
34. Cross-complainants are informed and believe, and on that
basis allege, that to the extent the Jeopardy Agreement grants King
World the right to compete with cross-complainants with regard to strip
game shows for first-run syndication, including by (1) producing or
licensing others to produce any strip game show for first-run
syndication, (2) distributing in first-run syndication or granting any
license to any other entity for the first-run syndication of any strip
game show, other than Wheel of Fortune and Jeopardy!, and (3) in any
other manner engaging in any activities in placing or maintaining any
strip game show in first-run syndication other than Wheel of Fortune and
Jeopardy!, then any such right to compete resulted from a mutual mistake
of the parties, or from a unilateral mistake by cross-complainants.
35. Cross-complainants have plain, speedy or adequate remedy
at law.
36. Cross-complainants and King World are presumed to have
intended to make an equitable agreement. If the Jeopardy Agreement does
not prohibit King World from competing with cross-complainants with
regard to strip game shows for first- run syndication, then the Jeopardy
Agreement is inequitable, entitling cross-complainants to reformation as
alleged herein.
PRAYER
WHEREFORE, cross-complainants pray for judgment as follows:
1. On the first and second causes of action, for damages
according to proof at the time trial;
2. On the third cause of action, for cancellation and
termination of the Wheel of Fortune Agreement;
3. On the fourth cause of action, for cancellation and
termination of the Jeopardy Agreement;
4. On the fifth and sixth causes of action, for reformation of
the Wheel of Fortune Agreement and the Jeopardy Agreement, to reflect
the true intent of the parties that King World would not compete with
cross-complainants with regard to strip game shows for first-run
syndication including by (1) producing or licensing others to produce
any strip game show for first run syndication, (2) distributing in
first-run syndication, or granting any license to any other entity for
the first-run syndication of, any strip game show, other than Wheel of
Fortune and Jeopardy!, and (3) in any other manner engaging in any
activities in placing or maintaining any strip game show, other than
Wheel of Fortune and Jeopardy!, in first-run syndication; and
5. On all causes of action, for:
a. their costs of suit incurred herein;
b. interest; and
c. such other, further, and different relief as
may be deemed just and proper.
DATED: May 8, 1997
TROOP MEISINGER STEUBER &
PASICH, LLP
By
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Linda D. Kornfeld
Attorneys for Defendants and
Cross-Complainants
CALIFON PRODUCTIONS, INC. and
JEOPARDY PRODUCTIONS, INC.
PROOF OF PERSONAL SERVICE
(1013a, 2015.5 C.C.P.)
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
I am employed in the County of Los Angeles, State of
California. I am over the age of eighteen and not a party to the within
action; my business address is: Courier Connection, 1762 Westwood
Boulevard, Suite 400, Los Angeles, CA 90024.
On May 8, 1997, I served the foregoing documents described as
CROSS-COMPLAINT FOR BREACH OF CONTRACT, TERMINATION OF CONTRACT, AND
REFORMATION on the parties listed below in this action by placing ___
the original X a true copy thereof enclosed in sealed envelopes and
served on counsel addressed as follows:
Arthur N. Greenberg, Esq.
Michael A. Greene, Esq.
GREENBERG GLUSKER FIELDS
CLAMAN & MACHTINGER, LLP
1900 Avenue of the Stars, #2100
Los Angeles, CA 90067-4590
Executed on May 8, 1997, at Los Angeles, California.
I declare under penalty of perjury under the laws of the State
of California that the above is true and correct.
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[Print Name] [Signature]
PROOF OF SERVICE BY FEDERAL EXPRESS
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
I am employed in the County of Los Angeles, State of
California. I am over the age of eighteen and not a party to the within
action; my business address is: TROOP MEISINGER STEUBER & PASICH, LLP,
10940 Wilshire Boulevard, Suite 800, Los Angeles, California 90024.
On May 8, 1997, I served the foregoing document described as
CROSS-COMPLAINT FOR BREACH OF CONTRACT, TERMINATION OF CONTRACT, AND
REFORMATION on the parties in this action by placing a true copy thereof
enclosed in sealed envelopes addressed to counsel for all parties at the
addresses listed below and depositing same with Federal Express:
Robert S. Rifkind, Esq.
David J. Stone, Esq.
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Executed on May 8, 1997, at Los Angeles, California.
I declare under penalty of perjury under the laws of the State
of California that the above is true and correct.
P. BERARDI /s/ P. BERARDI
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[Print Name] [Signature]